IMPORTANT INFORMATION: READ NOW SCHOOL OF ACCOUNTING SCIENCES DEPARTMENT OF FINANCIAL ACCOUNTING ACCOUNTING 1

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1 FAC1502/101/3/2011 IMPOTANT INFOMATION: EAD NOW SCHOOL OF ACCOUNTING SCIENCES DEPATMENT OF FINANCIAL ACCOUNTING ACCOUNTING 1 MODULE 1 (FAC1502) ACCOUNTING CONCEPTS, PINCIPLES AND POCEDUES TUTOIAL LETTE 101/3/2011 (FIST AND SECOND SEMESTES) SCHEME OF WOK, STUDY ESOUCES AND ASSIGNMENTS Contents 1. A word of welcome 2. Purpose and outcomes of this module 3. Communication with your lecturers 4. Student support system 5. Study material 6. How the assignment system works 7. How the examination system works 8. Assignments and assessment criteria ANNEXUES A: Assumed knowledge B: Study programme for 2011 C: Assignment 01 for FIST SEMESTE (compulsory) D: Assignment 01 for SECOND SEMESTE (compulsory) E: Assignment 02 for FIST SEMESTE (compulsory) F: Assignment 02 for SECOND SEMESTE (compulsory) G: Comprehensive exercise (questions with suggested solutions)

2 2 1. A WOD OF WELCOME 1.1 Introduction It is a pleasure to welcome you as a student to Module 1 (FAC1502) of the Accounting 1 (first year accounting) course. We hope that you will find your studies particularly stimulating this semester and that you will achieve success. The semester that you register for will be indicated on your registration papers when you register. If this is the first time that you are registered for FAC1502, you may not be registered for FAC1601 in the same semester. Ensure that you are registered for the correct semester as you are obliged to write the examination for that semester. The examination for the first semester will be during May and the examination for the second semester will be during October. Should you be faced with specific subject content problems in your studies, please do not hesitate to consult us by letter, , telephone or personally (by appointment). In this tutorial letter we would like to draw your attention to a number of very important matters and we request you to study them very carefully. We shall do our best to make your study of this module successful. You will be well on your way to success if you start studying early in the semester/ year and resolve to do the assignment(s) properly. You will receive a number of tutorial letters during the year. A tutorial letter is our way of communicating with you about teaching, learning and assessment. Tutorial Letter 101 contains important information about the scheme of work, resources and assignments for this module. We urge you to read it carefully and to keep it at hand when working through the study material, preparing the assignment(s), preparing for the examination and addressing questions to your lecturers. Please read Tutorial Letter 301 in combination with Tutorial Letter 101 as it gives you an idea of generally important information when studying at a distance and within a particular College. In Tutorial Letter 101, you will find the assignments and assessment criteria as well as instructions on the preparation and submission of the assignments. This tutorial letter also provides all the information you need with regard to the prescribed study material and other resources and how to obtain it. Please study this information carefully and make sure that you obtain the prescribed material as soon as possible. We have also included certain general and administrative information about this module. Please study this section of the tutorial letter carefully. ight from the start we would like to point out that you must read all the tutorial letters you receive during the semester immediately and carefully, as they always contain important and, sometimes, urgent information. We hope that you will enjoy this module and wish you all the best!

3 3 FAC1502/101/3 1.2 Compilation of the accounting I course This first year accountancy course for all B.Compt. and B.Comm. students (including B.Comm.-Law) consists of two separate semester modules, namely: FAC1502 (Accounting concepts, principles and procedures), followed by FAC1601 (Accounting reporting) The first year (Accounting 1) is concluded when both FAC1502 and FAC1601 are passed. Please note that the simultaneous registration for FAC1502 and FAC1601 is not allowed, as FAC1502 is an absolute prerequisite for FAC1601. LLB.-Students egister for FAC1503 (Accounting principles for law practitioners) Please note: The module ACN103P (Accounting for law practitioners) is no longer presented at UNISA. 2. PUPOSE AND OUTCOMES OF THIS MODULE 2.1 Purpose The purpose of this module is to: apply the basic principles of accounting; gather, process and record relevant information and compile basic statements of comprehensive income, statements of changes in equity and statements of financial position; keep proper record of and be accountable for assets; keep proper record of and be accountable for liabilities; keep proper record to ascertain the financial performance and financial position of sole proprietors and non-profit entities. prepare proper books from incomplete records 2.2 Outcomes Learning Outcome 1 Know and understand the nature and function of accounting. Learning Outcome 2 Ability to explain what is meant by the nature of accounting theory, principles, accounting policy, practice and procedures. Learning Outcome 3 Describe what the primary purpose of accounting is and what is understood by the double entry system including the ability to calculate the financial position of an entity and the elements of the basic accounting equation. Learning Outcome 4 Apply the concepts of income and expenditure to determine the gross and net profits (or losses) and the effect thereof on owner s equity.

4 4 Learning Outcome 5 Analyse and record transactions in the books of an entity and prepare a statement of financial position from the basic accounting equation. Learning Outcome 6 Prepare all the journals, posting to ledger accounts and to prepare a trial balance. Learning Outcome 7 Process year-end adjustments in the books of an entity. Learning Outcome 8 Complete the closing-off procedure, determine the profit or loss of an entity and prepare more advances financial statements. Learning Outcome 9 Treatment of transactions related to cash and cash equivalents, apart from cash receipts and payments. Learning Outcome 10 Treatment of all aspects of debtors in the books of an entity. Learning Outcome 11 Understand the importance of inventory and how entries related to inventory is recorded in the books of an entity. Learning Outcome 12 ecord transactions related to property, plant and equipment. Learning Outcome 13 ecord transactions related to other non-current assets such as investments. Learning Outcome 14 Know the treatment of current liabilities in the books of an entity. Learning Outcome 15 Describe non-current liabilities, record the necessary entries in the books and disclose it in the statement of financial position. Learning Outcome 16 ecord all transactions related to a sole proprietor and prepare the financial statements of a sole proprietor. Learning Outcome 17 ecord all transactions related to organisations and societies not to gain. Learning Outcome 18 Convert to a double-entry system from incomplete records.

5 5 FAC1502/101/3 3. COMMUNICATION WITH YOU LECTUES 3.1 Telephonically The lecturers responsible for this module are listed below. emember to have your student number ready when you contact a lecturer. Lecturers are available for telephone enquiries from 8:00 to 16:00 on weekdays. Lecturer s name Mr D von Well Building and office number AJH v/d Walt 4-67 Telephone number (012) Lecturer s name Ms KA Nkome Building and office number AJH v/d Walt 4-60 Telephone number (012) Lecturer s name Mr P Maraisane Building and office number Telephone number AJH v/d Walt 4-46 (012) Lecturer s name Me A du Plessis Building and office number AJH v/d Walt 4-65 Telephone number (012) Lecturer s name Prof D Scott Building and office number AJH v/d Walt 4-73 Telephone number (012) All queries that are not of a purely administrative nature but are about the content of this module should be directed to us. Please have your study material with you when you contact us. 3.2 Written correspondence You can also communicate with your lecturers via . Please note that feedback will not necessarily be given via . Therefore, it is important to give, in your , your student number, telephone number, fax number, address, and postal address. Please use the following addresses for all academic related issues: First semester students: Second semester students: FAC S1@my.unisa.ac.za FAC S2@my.unisa.ac.za The address for EGISTATION and EXAMINATION changes/enquiries is: econ@unisa.ac.za efer all your registration and examination queries (student related problems) to the above address.

6 Letters should be sent to: The Module leader (module code) Department of Financial Accounting P O Box 392 UNISA 0003 When writing to the University, always mention your student number, telephone number, the subject and the course code at the top of the letter. PLEASE NOTE: Letters to lecturers may not be enclosed with or inserted into assignments. 3.3 Communication with the University If you need to contact the University about matters not related to the content of this module, please consult the publication My Unisa that you received with your study material. This brochure contains information on how to contact the University (e.g. to whom you can write for different queries, important telephone and fax numbers, addresses and details of the times certain facilities are open). Always have your student number at hand when you contact the University. Please note that all administrative enquiries should be directed to the Unisa Contact Centre. Enquiries will then be channeled to the correct department. The details are as follows: Calls (SA only) International Calls Fax number (SA) Fax number (international) study-info@unisa.ac.za 3.4 Personal visits To avoid any disappointment, make an appointment with a lecturer as they are not always readily available. 4. STUDENT SUPPOT SYSTEM For information on the various student support systems and services available at Unisa (e.g. student counseling, tutorial classes, language support), please consult the publication My Unisa that you received with your study material.

7 7 FAC1502/101/3 4.1 Contact with fellow students Study groups It is advisable to have contact with fellow students. One way to do this is to form study groups. The addresses of students in your area may be obtained from the following department: Directorate: Student Administration and egistration PO Box 392 UNISA 0003 Please contact the Unisa Contact Centre myunisa If you have access to a computer that is linked to the internet, you can quickly access resources and information at the University. The myunisa learning management system is Unisa's online campus that will help you to communicate with your lecturers, with other students and with the administrative departments of Unisa all through the computer and the internet. To go to the myunisa website, start at the main Unisa website, and then click on the Login to myunisa link on the right-hand side of the screen. This should take you to the myunisa website. You can also go there directly by typing in Please consult the publication My Unisa which you received with your study material for more information on myunisa Discussion classes Tutorial letter FAC1502/102/1/2011 for the first semester Tutorial letter FAC1502/102/2/2011 for the second semester These tutorial letters will be dispatched to you as soon as they are available Tutorials Learning centres Student support is provided at the learning centres. Consult this year s issue of My Unisa for more detail.

8 8 5. STUDY MATEIAL 5.1 Inventory letter At the time of registration, you will receive an inventory letter that will tell you what you have received in your study package and also show items that are still outstanding. Also see the brochure entitled My Unisa. Check the study material that you have received against the inventory letter. You should have received all the items listed in the inventory, unless there is a statement like out of stock or not available. If any item is missing, follow the instructions on the back of the inventory letter without delay. PLEASE NOTE: Your lecturers cannot help you with missing study material. Please contact the Unisa Contact Centre at (SA only), or (international calls) (also see par. 3 above). 5.2 Study material The Department of Dispatch should supply you with the following study material for this module: One study guide Tutorial Letters 101 and 301 at registration and others later Apart from Tutorial Letters 101 and 301, you will also receive other tutorial letters during the year/semester. These tutorial letters will not necessarily be available at the time of registration. Tutorial letters will be dispatched to you as soon as they are available or needed (for instance, for feedback on assignments). If you have access to the Internet, you can view the study guides and tutorial letters for the modules for which you are registered on the University s online campus, myunisa, at Use only the telephone number given in the inventory for enquiries about missing tutorial matter.

9 9 FAC1502/101/3 5.3 Prescribed textbook Your prescribed book for this module for this year is the most recent edition of: About Financial Accounting, Volume 1, by Berry P, De Klerk, ES, et al. Butterworths. Durban. ( Please consult the list of official booksellers and their addresses listed in My Unisa. If you have any difficulties obtaining books from these bookshops, please contact the Unisa Contact Centre at (SA only), or (international calls) (also see par 3 above). 6. HOW THE ASSIGNMENT SYSTEM WOKS 6.1 Assignments and learning Assignments are seen as part of the learning material for this module. As you do the assignment, study the reading texts, consult other resources, discuss the work with fellow students or tutors or do research, you are actively engaged in learning. Looking at the assessment criteria given for each assignment will help you to understand what is required of you more clearly. In some cases, additional assessment might be available on the myunisa site for your module. For students attending tutorial sessions, tutors may also set additional tasks and give feedback in class Study process Your studies should progress smoothly if you work as follows: ead as far as ANNEXUE A of this tutorial letter. Work through ANNEXUE A (Assumed knowledge) and study the contents if necessary. Study the relevant study units of the Study Guide for assignment 01, (use the suggested study programme in ANNEXUE B). Do the first exercise (for each study unit) in the Study Guide, without referring to the solution. Mark your answer in conjunction with the solution in the Study Guide. Ascertain why, when, where, how your answer differs from that of the solution. If you do not get more than 70% for the exercise (use your own marking scheme), do the next exercise and mark it. Study the study unit again. Do the previous exercise(s) again until you get at least 70% per exercise. This may require much more time, but it will ensure that you know and understand the contents of the study material.

10 10 Complete the compulsory assignment 01 on the mark-reading sheet (make a copy for yourself) and mail/send it to UNISA for marking. Assignment 01 is very important as it will ensure your admission to the examination. Assignment 1 and 02 can also be submitted electronically via myunisa but not faxed or ed!: To submit an assignment via myunisa: Go to myunisa. Log in with your student number and password. Select the module from the orange bar (FAC1502). Click on assignments in the left menu. Click on the assignment number you want to submit. Follow the instructions. After completing and submitting assignment 01, carry on with the study programme. Do not wait for the suggested solution or for the return of the marked assignment. Complete compulsory assignment 02 on a mark-reading sheet. Submitting assignment 02 will not lead to admission to the exam, but will count towards the year mark. Follow the instructions for submitting the assignment via myunisa as per paragraph 5.5 above. Mark your assignments by using the suggested solution which will be dispatched to you after the due date for assignment 02. The solutions will also be placed on the myunisa system of UNISA s webpage ( If your answer differs from the suggested solution, make sure that you understand the reason why. 6.2 Important information regarding assignments contribution to year marks There are 2 assignments for this module: Assignment 1 is a multiple choice assignment that is compulsory and contributes 50% towards your year mark. If you do not submit this assignment you will not be admitted to the examination; Assignment 2 is a multiple choice assignment that is also compulsory and contributes 50% towards your year mark; Please keep copies of your submitted assignments and if submitted through myunisa, proof that you submitted the assignment Compulsory assignments 01 and 02 To fully benefit from our formative tuition and assessment, the Management of the University has taken a decision to introduce two compulsory assignments in all modules to be submitted by set due dates. Submission of the first compulsory assignment by its due date will give a student admission to the examination in the particular module. The marks obtained in the two compulsory assignments will contribute equally towards the final year mark.

11 11 FAC1502/101/3 The year mark contributes 10% towards the final mark, and is calculated as follows: 50% of the mark obtained for assignment 01 plus 50% of the mark obtained for assignment 02 If you only submit assignment 1, your year mark will be 5% of the mark obtained for this assignment. This will then be your year mark out of a possible 10%. If, for example, you obtain 80% for assignment 1 and 0% for assignment 2, your year mark will be 4%. A year mark often causes a student to pass or fail this module. According to University policy you require a sub-minimum of 40% in the examination before your year mark is taken into consideration. In other words, if you do not obtain at least 40% in the examination, you will automatically fail, and your final mark will be the mark you obtained in the examination. Students require a final mark of 50% to pass a module. This final mark is calculated as follows: (10% x of the year mark) + (90% x mark obtained in the examination) Example: A B C D Exam mark Year mark contribution contribution to required to pass final mark at 10% (50% minus year mark contribution) Average of marks for assignment 1 & 2 (Year mark) Minimum exam mark required to pass (c 0,9) Student 1 100% 10% 40% 45% Student 2 70% 7% 43% 48% Student 3 50% 5% 45% 50% Student 4 30% 3% 47% 52% Student 5 20% 2% 48% 53% Student 6 10% 1% 49% 54% Student 7 0% 0% 50% 56% If you obtain between 40% and 49% as a final mark, you will be allowed to write a supplementary examination. The supplementary examination will be written at the end of the next semester. This means that if you qualify for a supplementary examination in May, you will write the FAC1601 paper in October. Similarly, students who qualify for a supplementary examination in October, will write this paper in May of the following year. A student may, however, write only one supplementary examination per enrolment. To pass this supplementary examination, you must obtain at least 50% in the examination itself. The year mark is then not taken into consideration at all.

12 12 Please ensure that the compulsory assignments reach the University before the due date late submission of assignment 01 will result in you not being admitted to the examination! efer to page 14 (paragraph 6.5) of this tutorial letter (101/3/2011) for the due date(s). If, for any reason, you transfer your exam period for FAC1502 to a following semester, you need to submit Assignments 01and 02 before the due date in the semester for which you originally registered for the course. The year mark you obtain will then be carried forward to the next semester because you will not be allowed to submit any assignments in the semester to which you have changed. By applying to have your semester changed to a following semester, in effect, you are applying for an aegrotat examination. However, you still need a year mark that will be taken into account as explained above hence the need to submit the compulsory assignment in the semester for which you originally registered. 6.3 Submitting assignments You may submit assignments done on mark-reading sheets either by post or electronically via myunisa. Assignments may not be submitted by fax or . To submit assignments via Post, assignments should be addressed to: The egistrar PO Box 392 UNISA 0003 For detailed information and requirements as far as assignments are concerned, see the brochure My Unisa that you received with your study material. To submit an assignment via myunisa: On go to myunisa Log in with your student number and password Select FAC1502 from the orange bar Click on assignments in the left menu Click on the assignment number you want to submit (01 or 02) Follow the instructions on the screen. PLEASE NOTE: Enquiries about assignments (e.g. whether or not the University has received your assignment or the date on which an assignment was returned to you) must be addressed to the Unisa Contact Centre at (SA only), or (international calls) (also see par. 3 above). The receipt of an assignment and the mark obtained is also reflected on myunisa. To go to the myunisa website, start at the main Unisa website, and then click on the login to myunisa link under the myunisa heading on the screen.. This should take you to the myunisa website. You can also go there directly by typing in

13 13 FAC1502/101/3 You can also send an to to enquire about an assignment. Enter only your student number in the subject line. In the message you must indicate the course code and the specific assignment number that you are enquiring about. 6.4 Commentaries and feedback on assignments You will receive the correct answers automatically for multiple-choice questions. For written assignments, markers will comment constructively on your work. However, commentaries on compulsory assignments will be sent to all students registered for this module in a follow-up tutorial letter, and not only to those students who submitted the assignments. The tutorial letter number will be 201, 202, etc. As soon as you have received the commentaries, please check your answers. The assignments and the commentaries on these assignments constitute an important part of your learning and should help you to be better prepared for the next assignment and the examination. The commentary on the self-evaluation assignment is included in this tutorial letter. This will enable you to mark your assignment as soon as you have completed it. Feedback on myunisa additional assessments will be automated and therefore immediate. Additional work set by tutors will be discussed in class. 6.5 Submission dates Assignments constitute an integral part of the tutorial matter and must, together with tutorial letters, be studied for examination purposes. ASSIGNMENTS MAY NOT BE SUBMITTED BY FAX O Study material on which assignments are based is given in ANNEXUE B. Work carefully through the relevant tutorial matter before you tackle the assignment. Calculate your answers for the multiple-choice questions of assignments 01 and 02 on a separate piece of paper. Use a mark reading sheet to complete assignments 01 and 02 and submit the assignments. Ensure that you use the correct UNIQUE NUMBE allocated for the particular assignment and semester. This assignment can also be submitted via myunisa. emember: - use a soft HB pencil to code the mark reading sheet - there is only one correct answer to each question. - all questions are equal in value.

14 14 No bar code sticker should be attached to the mark reading sheet. Assignments must not reach us later than the dates specified in ANNEXUE B. Assignments must under no circumstances contain any correspondence. Specify the module code (FAC1502) and assignment number (01 or 02) in all enquiries regarding assignments handed in for marking. These enquiries must be directed to the Assignments section at (012) IMPOTANT INFOMATION: FIST SEMESTE 2010 (examination in May/June) Assignment number Format Compulsory Unique number 1 Multiple choice 2 Multiple choice Exam Long questions * Exam date will be announced. Due date Contribution towards final mark Yes Feb % Yes Mrch % Yes - * May % SECOND SEMESTE 2010 (examination in October/November) Assignment number Format Compulsory Unique number Due date 1 Multiple choice 2 Multiple choice Exam Long questions * Exam date will be announced. 6.6 Assessment of assignments Please note: Contribution towards final mark Yes Aug % Yes Sept % Yes - * Oct % Although students may work together when preparing assignments, each student must write and submit his or her own individual assignment. In other words, you must submit your own ideas in your own words, sometimes interspersing relevant short quotations that are properly referenced. It is unacceptable for students to submit identical assignments on the basis that they worked together. That is copying (a form of plagiarism) and none of these assignments will be marked. Furthermore, you may be penalised or subjected to disciplinary proceedings by the University. Do not copy the assignment solutions of fellow students!!

15 15 FAC1502/101/3 Plagiarism (copying) is the act of taking words, ideas and thoughts of others and passing them off as your own. It is a form of theft which involves a number of dishonest academic activities. The Disciplinary Code for Students (2004) is given to all students at registration. Students are advised to study the Code, especially Sections and (2004:3-4). Kindly read the University s Policy on Copyright Infringement and Plagiarism as well. 7. HOW THE EXAMINATION SYSTEM WOKS 7.1 Examination admission The submission of Assignment 01 is a requirement to be admitted to the examination. It will, however, be to your own advantage to complete both assignments as well as the comprehensive exercise, as: the assignments provide practice which is essential in your study of Accounting; valuable revision material is contained in the assignments and ensure that you work throughout the semester; and the type of questions in the assignments and the comprehensive exercises are usually representative of the type of questions which you can expect in the examination. 7.2 Examination period This module is offered in a semester period of fifteen weeks. This means that if you are registered for the first semester, you will write the examination in May/ June 2010 and the supplementary examination will be written in October/ November If you are registered for the second semester you will write the examination in October/ November 2010 and the supplementary examination will be written in May/ June During the module of the semester, the Examination Section will provide you with information regarding the examination in general, examination venues, examination dates and examination times. 7.3 Examination paper At the end of the semester (May for semester 01, and October for semester 02) you will be required to write a two hour examination for module FAC1502. The paper will consist of long-type questions. A non-programmable pocket calculator may be used. The examination script consists of a book with 12 pages. Every page has three columns on the right hand side (similar to general journal paper). If you don t want or cannot use the columns, ignore them and draw your own columns or T-accounts. You may open the book and use the left hand page for the Dr-side and the right hand page for the Cr-side of an account (e.g. ignoring the extra columns).

16 Start every question on a new (separate) page. Number each sub-question clearly. 16 When answering a question, always read what is required before reading through all the information. This will enable you to know immediately what information is needed to answer the question. If you read through the question in its entirety without knowing what is required, you will have to reread the information and waste time in this manner. If you obtain between 40% and 49% as a final mark, you will be allowed to write a supplementary examination. The supplementary examination will be written at the end of the following semester. To pass this supplementary examination, you must obtain at least 50% in the examination itself. This means that if you qualify for a supplementary exam in May you will write the FAC1502 second semester paper in October. Similarly students who qualify for a supplementary examination in October will write this paper in May of the following year. A student may write only one supplementary examination per enrolment. If you qualify for a supplementary examination, no further study material will be supplied to you during the following semester. You must not submit any assignments. Due to various reasons the lecturers cannot send, fax or previous year s exam papers or assignments and solutions and we would appreciate it if you will not contact us in this regard. You are advised to consult the time-table timeously in order to plan your final revision programme accordingly. eport any examination problems (clashes of dates) directly to the Examination Section via the Call Centre. Please start studying early to avoid cramming at the last moment. Ensure that you have received all assignment solutions at least two weeks before the examination. No solutions will be faxed to students in the 14 days prior to the examination. Solutions are available on myunisa system of UNISA s webpage (assign@unisa.ac.za). 7.4 Previous examination papers Some previous examination papers are available on myunisa. A copy of a previous examination paper with suggested solution is also included in tutorial letter FAC1502/ ASSIGNMENTS AND ASSESSMENT CITEIA 8.1 Important information regarding annexures ANNEXUE A deals with assumed knowledge. Before starting to work through the Study Guide, first acquaint yourself with the contents of ANNEXUE A. ANNEXUE B is a suggested study programme for each semester. Students often fail to plan their studies properly in order to achieve specific study goals at predetermined dates. This leads to a haphazard approach to their studies and the use of ineffective study techniques.

17 17 FAC1502/101/3 To assist you in this regard, a study programme is given. This programme indicates the dates on which certain sections of the study material as well as assignments should be completed in order to meet all due dates. The study programme is based on the following assumptions: That study will commence either on 15 January for the first semester or 1 July for the second semester and that the course should be completed timeously leaving sufficient time for revision. That you should study more or less 8 hours per week per course, eg FAC1502.We are of the opinion that this is within your reach. If you have never studied Accounting before you will need more time especially where you have to do the exercises several times (refer paragraph 5(4) above). We are convinced that, if you adhere to this programme, you should be able to master the subject. It is very important that the subject matter covered in the study units should be mastered and not just skimmed. If you happen to register late or fall behind with this programme, extra effort on your part will be necessary. ANNEXUE C: ANNEXUE D: ANNEXUE E: ANNEXUE F: ANNEXUE G: ASSIGNMENT 01 for FIST SEMESTE (compulsory) ASSIGNMENT 01 for SECOND SEMESTE (compulsory) ASSIGNMENT 02 for FIST SEMESTE (added to year mark) ASSIGNMENT 02 for SECOND SEMESTE (added to year mark) Comprehensive exercise (questions with solutions). IMPOTANT 1. PLEASE ENSUE THAT THE ASSIGNMENTS EACH THE UNIVESITY BEFOE THE DUE DATES. 2. LATE SUBMISSION OF ASSIGNMENT 01 WILL ESULT IN YOU NOT BEING ADMITTED TO THE EXAMINATION.

18 18 In spite of the care taken to ensure that the study guide, tutorial letters, assignments, and other study material, errors, omissions, and discrepancies may still occur. Should you come across such matters, or matters which are not clearly expressed, kindly let us know to enable us to make the necessary corrections. We hope that you will enjoy this module and we wish you success with your studies. With best wishes. Tel nr Prof D Scott Ms A du Plessis Mr D von Well Mr P Mariasane Ms KA Nkome Ms JHJ Coetzee (Secretary) LECTUES: ACCOUNTING 1: MODULE FAC1502

19 19 FAC1502/101/3 ANNEXUE A: ASSUMED KNOWLEDGE It is assumed that students have knowledge to do some elementary calculations. Some of these are discussed in the following paragraphs, in order to help those students who wish to acquaint themselves with the relevant subjects. 1 Basic calculations To calculate a percentage of an amount or number e.g. 13% of The 13% actually means 13 out of 100, or ; and the word "of" means "multiply by". Therefore: 13% of can be read: x = 507,00 or, when using a pocket calculator: 3900 x.13 = (By using the factor of ".13", you have already divided the 13 by 100. All percentages can be used in this manner.) To relate the price of a number of items to a single item e.g. 39,52 paid for 13 items, one item will cost 39,52 13 = 3,04. This amount can then be used to calculate the price of another number of articles of the same calibre, e.g. 27 items will cost 27 x 3,04 = 82,08. 2 Interest Interest is in effect the payment for the use of somebody else's money and is therefore the "price" of money or a finance cost. Interest can be receivable (e.g. interest on investments) or it can be payable (e.g. interest on loans, bonds or debentures). To calculate interest, one needs: The amount involved, The interest rate at which it is invested/borrowed, and The period for which it is invested/borrowed. Whenever a period is involved, students can consider using a "time-line" which may help in the calculation. A time-line can be prepared as follows: (a) Information: Amount invested (or borrowed) Interest rate 10,5% Period: 1 May 20.1 to 31 December 20.1 = 8 months 1 May Dec 20.1 Period: 8 mths Interest rate: 10,5% Total period = 8 months (or 2/3 of a year = 0,6667 yr).

20 20 (b) Information: Amount invested (or borrowed) Interest rate 10,5% Period: 1 May 20.0 to 31 December 20.1 = 1 yr, 8 mths (or 20 mths) 1 May Dec Jan Dec 20.1 Period: 8 mths Period: 12 mths Interest rate: 10,5% (= 1 yr) Interest rate: 10,5% Total period = 20 months (or 1 and 2/3 of a year = 1,6667 yr). Examples: 1. Period shorter than one year: Amount invested (or borrowed) Interest rate 10,5% Period: 1 May 20.1 to 31 Dec 20.1 = 8 months Calculation of interest: x 10,5 100 x 8 12 = 840,00 O: x 0,105 x 8 12 = 840,00 O: x 0,105 x 2 3 = 840,00 O: x 0,105 x 0,6667 = 840,00 2. Period longer than one year: Amount invested (or borrowed) Interest rate 10,5% Period: 1 May 20.0 to 31 Dec 20.1 = 1 yr, 8 mths (or 20 mths) Calculation of interest: x 10,5 100 x = 2 100,00 O: x 0,105 x = 2 100,00 O: x 0,105 x 5 3 = 2 100,00 O: x 0,105 x 1,6667 = 2 100,00

21 21 FAC1502/101/3 3 Profits and settlement discounts In the case of the calculation of profits and settlement discounts, a period is not involved; therefore no time-line is necessary. In this case the amount and the percentage are the key factors. Examples: 3.1 Profits: Profit on cost price: Cost price Profit on cost price 25% To calculate: Selling price Calculation of selling price: ( x ) = O: ( x 0,25) = O: x 1, The rationale behind the last calculation is that, if the cost price is 1,00 the profit will be 0,25, and the selling price will be 1,25. Therefore: If the cost price is , the selling price will be x 1, Profit on selling price: Selling price Profit on selling price 25% To calculate: Cost price. Calculation of cost price: ( x ) = O: ( x 0,25) = O: x 0, In this case the calculation of the last amount is not as simple as in the previous case. One must reason a little: The selling price of includes a profit of 25%, therefore, if the selling price is 1,00, and the profit is 0,25, the cost price (which is less than the selling price) will be 0,75. Thus, to calculate the cost price: If the selling price is , the cost price will be x 0,75.

22 Selling price is given but the percentage profit is on cost price: Selling price Profit on cost price 25% To calculate: Cost price. Calculation of cost price: ( x ) = O: ( x 0,20) = O: ) 1,25 (note: divided by) The calculation of the last amount is reasoned as follows: The selling price of includes a profit of 25% on cost price, therefore, if the selling price is 1,25, and the profit is 0,25, the cost price (which is less than the selling price) will be 1,00. Thus, to calculate the cost price: If the selling price is , the cost price will be ,25. To sum up: Cost price 1,00 Profit x 1,25 0,25 1,25 Selling price 1,25 Given the cost price and you have to calculate the selling price (which is more than cost price) multiply cost price with 1,25 (if the percentage is 25%). Given the selling price and you must calculate the cost price, (which is less than selling price) divide the selling price with 1,25 (if the percentage is 25%). 3.2 Discounts (settlement discount granted and settlement discount received) Cash or trading discount on sales: Selling price Discount on selling price 5% To calculate: Net selling price. Calculation of net selling price: ( x 5 100) = O: ( x 0,05) = O: x 0,

23 23 FAC1502/101/3 The last calculation is reasoned as follows: The selling price of must be reduced by 5%, therefore, if the selling price is 1,00, the discount will be 0,05, and the net selling price (which is less than the original selling price) will be 0,95. Therefore: If the selling price is , the net selling price will be x 0, Settlement discount on payment of accounts: 4 atios Amount outstanding on account Settlement discount on payment made on or before a specified date 5% To calculate: Net amount to be paid. Calculation of net amount to be paid: ( x 5 100) = O: ( x 0,05) = O: x 0, The last calculation is reasoned as follows: The amount of must be reduced by 5%, therefore, if the full account is 1,00, the settlement discount will be 0,05, and the net amount to be paid (which will be less than the original amount to be paid) will be 0,95. Therefore: If the amount of the account is , the net amount to be paid will be x 0, Percentage as a ratio: A percentage can also be regarded as a ratio; a ratio to 100. This means that a ratio of 15% actually means 15 out of 100 or 15 :100. If a student obtained 43 marks out of 60, his ratio will be 43 to 60 (indicated as 43:60), or x 100 = 71,7% (or 71,7 out of 100 or 71,7:100). By dividing the values both sides of the colon by 100, you get a ratio of 0,717:1 (refer to par 4.2 below). Similarly, if the sales of an entity are , and the gross profit on these sales is , the percentage gross profit is: x 100 = 60%. Without doing a complicated calculation, one can immediately say that the cost price is 40% (= 100% - 60%). This 40% can also be calculated as follows: [= ] x 100 = 40%.

24 Straight forward ratios: This type of ratio is often found in the apportionment of profits between partners. The numbers in the ratio are added and this is divided into the amount to be apportioned. Each partner will then receive his part (portion) by multiplying his ratio with the portion thus calculated, e.g.: If the partners receive an equal part of the profits, the total amount of the profit is merely divided by the number of partners, e.g. a profit of must be allocated equally to 3 partners. Each partner will receive the same amount as the other partners, i.e = (the ratio is 1:1:1 in this case). The profits of a partnership is apportioned to partners A, B and C in the ratio 3:2:1. A profit of must be apportioned. This will mean that the profit of must be divided by 6 [= ] portions, which equals Partner A will receive 3 portions (= x 3 = ), partner B will receive 2 portions (= x 2 = ), and partner C will receive 1 portion (= x 1 = ). The total amount allocated to the three partners should, of course, be the total profit (i.e = ). It quite often happens that profits should be apportioned in relation to the capital invested by each partner. If, for example, partners X, Y, and Z invested , and in the partnership, the ratio will now be = = 2:1:4 = 7 (parts = the amounts of the capitals as well as the total capital, divided by ). A profit of will be apportioned as follows: Partner X: ( x 2) = Partner Y: ( x 1) = Partner Z: ( x 4) = =

25 25 FAC1502/101/3 ANNEXUE B: POPOSED STUDY POGAMME FO 2011 PLEASE NOTE: The "DUE DATE" is the date on which the Assignment must reach the University campus in Pretoria. Therefore, please provide sufficient time for any delays due to distance from Pretoria, or otherwise. FIST SEMESTE: DATE ± 14/01 to 18/02 18/02 to 20/02 21/02 28/02 21/02 to 11/03 11/03 to 13/03 21/03 28/03 STUDY MATEIAL AND ASSIGNMENTS Study: Study units 01 to 10 Do Assignment 01 (compulsory) Mail Assignment 01 Due date: Assignment 01 Study: Study units 11 to 18 Do Assignment 02 (optional) Mail Assignment 02 Due date: Assignment 02 15/03 to 17/03 Do Comprehensive Exercise May: EXAMINATION (STUDY UNITS 1 TO 18) (confirm date at ) SECOND SEMESTE: DATE ± 01/07 to 01/08 01/08 to 05/08 08/08 15/08 08/08 to 26/08 26/08 to 28/08 29/08 05/09 STUDY MATEIAL AND ASSIGNMENTS Study: Study units 01 to 10 Do Assignment 01 (compulsory) Mail Assignment 01 Due date: Assignment 01 Study: Study units 11 to 18 Do Assignment 02 (optional) Mail Assignment 02 Due date: Assignment 02 27/08 to 31/08 Do Comprehensive Exercise October: EXAMINATION (STUDY UNITS 1 TO 18) (confirm date at )

26 26 ANNEXUE C: ASSIGNMENT 01 FIST SEMESTE THIS ASSIGNMENT IS COMPULSOY AND IS NECESSAY FO EXAMINATION ADMISSION STUDENTS EGISTEED - FO THE FIST SEMESTE Due date: 28 February 2011 Unique Number:

27 27 FAC1502/101/3 ANNEXUE C: ASSIGNMENT 01 FO FIST SEMESTE DUE DATE: First semester 28 February 2011 UNIQUE NUMBE: DO NOT SUBMIT ASSIGNMENTS BY MEANS OF FAX O NB: 1. This assignment must be answered on a mark reading sheet or can be submitted via myunisa. This assignment is marked electronically, therefore the strict adherence to the due date. 2. Before answering this assignment please read paragraphs 6 to 8 of this tutorial letter. 3. This assignment covers study units 1-10, and comprises 20 multiple choice questions. 4. NO EXTENSION WILL BE GANTED FO THE LATE SUMBISSION OF THIS ASSIGNMENT AND NO COESPONDENCE O TELEPHONE CONVESATIONS WILL BE CONDUCTED IN THIS EGAD. 5. IMPOTANT ASPECTS EGADING MULTIPLE-CHOICE ASSIGNMENTS A mark-reading sheet is required for answering assignment 01. Before completing the mark-reading sheet please see the instructions contained in this year s issue of UNISA: SEVICES AND POCEDUES. ead these instructions CAEFULLY and follow them EXACTLY to avoid mistakes. Work carefully through the relevant tutorial matter before you tackle the assignment. Calculate your answer on a separate piece of paper before you complete the markreading sheet. EMEMBE There is only one correct answer to each question. All questions are equal in value. Only mark-reading sheets provided, may be used. Colour in the correct block with a HB pencil. Fill in your student number correctly. Fill in the assignment number correctly. Fill in the unique assignment number for the specific semester correctly. Every assignment which is marked by the computer is given a unique number. The number contains information on the course code and assignment number. When the computer reads the mark-reading sheet with, say, the unique number , it "knows" that it is Assignment 01 for that specific module. Send only your mark-reading sheet to the Assignment Section in the appropriate envelope. Make sure that you have enough mark-reading sheets.

28 28 DO NOT: make more than one mark per question, tear or fold the mark-reading sheet, staple the mark-reading sheet to another piece of paper, colour outside the block, colour in the block with a pen, make corrections with correction fluid, submit answers on a written sheet of paper, or try to repair a torn mark-reading sheet with sticky tape use another one.

29 29 FAC1502/101/3 ASSIGNMENT 01 (100 marks) (MULTIPLE CHOICE QUESTIONS) Do this assignment on a mark reading sheet and mail it or submit it via myunisa. (Do all questions first in rough to find the correct answer) Question1 Which one of the following statements is incorrect? 1. Borrowing money from the bank is an external event. 2. Accounting information is primarily used by external parties. 3. Economic activities translated into financial terms are called data. 4. Accounting is a means by which information, regarding business activities, is transmitted to the management and others. Question 2 Which one of the following statements is incorrect? 1. According to the matching principle income, and costs incurred in generating that income, must be brought into account during the same financial period. 2. According to the prudence concept, income cannot be brought into account until it has been realised. 3. The policy of consistency requires that a specific basis, method, procedure or approach, once chosen, should be maintained. 4. The going-concern principle requires that transactions and occurrences with no essential bearing upon the nature and scope of the entity's activities should not be brought into account. Question 3 Which one of the following statements is correct? 1. The statement of financial position reflects the financial position of an enterprise at a specific date. 2. The statement of comprehensive income reflects the financial position of an enterprise at a specific date. 3. According to the financial performance postulate, the financial position of an entity must be reflected at a particular point in time. 4. According to the matching principle, revenue and expenses are recorded in the books in the financial year in which the contract was entered into.

30 30 ASSIGNMENT 1 (continued) Question 4 The accountant of Golly Ltd ascertained that the returns inward journal had been overcast by 100. Which one of the following ledger accounts will be affected by this error? 1. Debtors control account in the general ledger. 2. Purchases account in the general ledger. 3. Purchases returns account in the general ledger. 4. Creditors control account in the general ledger. Question 5 B. Smith, the owner of Our Own Shop, took goods with a selling price of 200 for his own use. Selling prices are determined by a mark-up of 33_% on cost price. The periodic inventory system is in use. Which one of the following alternatives represents the general ledger accounts as well as the effect of the transaction on the accounting equation? General ledger accounts Accounting equation Debit Credit A = L + Profit Drawings B. Smith Drawings Purchases Inventory Inventory Debtors control Sales

31 31 FAC1502/101/3 ASSIGNMENT 1 (continued) Question 6 During January 19.4 the following transactions were incurred by Help epair Services: 19.4 January 2 Paid instalment due on loan from X Xavier 15 Services rendered to client on credit Paid creditor Pompdienste cash Which one of the following alternatives correctly reflects the net influence of the above transactions on the extended accounting equation of Help epair Services? Assets = Owners equity + Liabilities Debtors Cash Capital Net income Loans Creditors Question 7 The following information appeared in the accounting records of Sala Limited during June 19.2: Transactions: 19.2 June 2 Merchandise sold on credit to aw for 200 was debited to the account of awly. 10 D Crooky, a debtor for 100, was declared insolvent. eceived a final dividend of 25. The account must be closed off. 15 eceived a letter from Korana Wholesalers, notifying Sala Limited that their overdue account of 500 had been debited with 15 interest. 28 A cheque for 200 received from B Bara in settlement of his account of 220 was returned by the bank today due to a lack of funds. Which one of the following amounts will be debited via the general journal to the debtors control account as sundry accounts?